Raiffeisen Bank International: potential event-driven BUY (stays BUY)
We keep Raiffeisen Bank International (RBI) as a BUY-rated stock and set our new 12M price target (PT) at EUR 22.0/share, 35% upside. 2023E may prove to be an inflection year for RBI. We recognise this as an event-driven BUY and, as such, it is very hard to position it against our other CEE banks’ pecking order. The bottom macro cycle; the lingering CHF mortgage saga in Poland; and, first and foremost, the material exposure to Russia and Belarus are the three key themes ahead. They all bear some negative impact, but we recognise them as priced in. Some more detailed information, which would allow the market to gauge the value of the impacts of these key themes, should result in share price action, in our view. The first and most important thing is the outcome of the group’s exposure in Russia and Belarus – the most important potential share price catalyst currently, in our view. In this report, we present our 2023-25E financial forecasts for RBI, with the full deconsolidation of Russia and Belarus, with no book value/dividend repatriation to the group. This is a very negative scenario, but we have come to the conclusion that it has been priced into the current market valuation. RBI trades at our 2022E P/BV of 0.3x (inclusive of Russia and Belarus) and our 2023E of 0.5x (post the deconsolidation of the two). We see this valuation as offering very limited downside risk. Should this potential scenario play out, RBI would become a far more Eurozone and defensive geographies (e.g., the Czech Republic and Slovakia) orientated group.Raiffeisen Bank International is a universal bank focusing on corporate and retail customers in Central and Eastern Europe (CEE) and on corporate customers in Austria. In CEE, Co. consists of a network of banks, leasing companies and financial service providers. In Austria, Co. is involved in corporate finance and export and trade finance banks. Co. provides services to customers in 2,800 branch offices. In the retail banking business, Co.'s product and service portfolio comprises inter alia credit services (mortgages, credit cards and personal loans), as well as payment transaction and current account package services. As of Dec 31 2014, Co.'s total assets amounted to Euro121.6 million
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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